Buying an annuity

When you take your
benefits,
you can take part of your
Accumulated Fund
as a tax-free cash sum. The remainder
must be used to buy an Annuity.

You can buy your annuity from an insurance company of
your choice. If you do not choose an insurance company, the
Trustee will do so on your behalf. The cost of an annuity
varies depending on your age, gender, interest rates and life expectancy at
the time you take your benefits. It also depends on the type of annuity you choose
(see common options below). You may also have the
option of purchasing your pension annuity from the UKRF.

The amount of pension you will receive at retirement
will depend on:

The value of your
Accumulated Fund
(made up of contributions, investment returns less any tax-free
cash taken).

The type of annuity you choose.

The most common options when choosing your annuity
are:

Pension increases – annual increases to your
pension to offset the effects of inflation (e.g. 3%, 5%
or in line with the Retail Prices Index (RPI)).

Partner’s pension – a pension payable
on your death and the level of that pension (e.g. half
or two-thirds of your own pension).

A guarantee that your pension will be paid for at
least five years (so if you die within five years of
taking your benefits, the balance of five years’
payments is paid to your dependants as a lump
sum).